Kettle controls business welcomes strong first half performance

Isle of Man kettle safety controls manufacturer and supplier, Strix, said it has enjoyed a solid six month trading period, leading to a commitment to raise its full year dividend to shareholders by 10%.

In a trading update today covering the period to June 30, it said the group has delivered a solid performance and the board confirms that it expects to report results in line with market expectations for the financial year.

Strix expects to report growth in adjusted profit after tax and a good net debt position given the cash committed to a new manufacturing facility in China, an acquisition in March 2019, and the increased dividend to shareholders.

Chief executive Mark Bartlett said: “Strix has achieved another solid performance, despite continued challenges presented by the macro-economic conditions in which the group operates.

“In particular, maintenance of the group’s market share in the regulated and less regulated markets, combined with modest growth in China, demonstrates the strength of our core business model.”

He added: “We have maintained our margins due to our continued focus on operational enhancements and cost improvements of our core products whilst remaining on track with key projects, including the construction of the new facility in China and the integration of the assets acquired in March.

“The appointment of Harry Kyriacou as chief commercial officer on 1 April 2019, has also enabled us to increase our focus on the commercialisation of innovative new product ideas.

“As a board, we have committed to increase the full year dividend by 10% to 7.7p per share, an indication of our confidence in achieving the group’s business objectives for 2019.”

The group said the market volatility experienced through 2018 as a consequence of geo-political events has intensified in 2019, including Brexit and USA/China trade tensions.

The group has not experienced any material impact as a result of USA/China tariffs as the flow of goods is principally between the Isle of Man and China.

Despite these headwinds, the global kettle safety controls market posted growth of around 2% with stronger growth in the United States and the Far East offsetting weaker performance in China and the CIS, the Commonwealth of Independent States formed when the former Soviet Union dissolved.

Strix has maintained its global market leading share of the kettle controls market, achieving a stable market share in the regulated and less regulated markets, together with modest share growth in China as a result of actions taken during the second half of 2018 and the first half of 2019.

The Aqua Optima branded water filtration products have achieved a stable share in the key United Kingdom market despite challenging market conditions, which have driven an overall market decline of around 7% as a result of consumer confidence issues due to Brexit and price rises.

Aqua Optima remains well placed to capture future growth when market sentiment improves as a result of its share of the tradebrand segment.

Performance of the assets acquired from HaloSource in the period since March 2019 has been in line with the group’s expectations.

The Astrea product, which is now part of Strix, has received significant interest from a number of parties with discussions ongoing with a leading global brand and a leading North American home shopping network.

Strix said it continues to seek further opportunities to enter into agreements which management believe will drive future profitability.

The appointment of an experienced chief commercial officer in the period has further increased the focus on the commercialisation of new products, together with the execution of a ‘category management’ approach to drive sustainable future growth.

The group continues to actively work with selected partners in the ‘small domestic appliance’ and ‘baby product’ markets to launch a number of innovative new appliances during 2020.

Strix said the project to relocate its existing manufacturing operations in China has advanced in line with the project schedule and the group is pleased to report that a land usage agreement was signed during the period.

This agreement grants the right to use the land for 50 years, a significantly longer period than originally expected, which provides security and stability for the site for the duration of its operational life.

Design work is under way, with construction expected to start during the second half of 2019 and the project is expected to complete in the first quarter of 2021.

The group will announce its interim results for the six month period ended 30 June 2019 on Wednesday, 18 September 2019.